Developers filling industrial space gap

Industrial property developers are turning on the speculative switch, with almost 900,000 square metres of space being sought across Australia by major companies, especially those in logistics and heavy equipment.

Colliers International, which has been tallying requirements across the country, said demand had made institutional developers more enthusiastic about speculative development.

Major listed developers
Goodman Group
,
DEXUS
and
Australand
have more than 60,000 square metres of speculative development under way in western Sydney alone.
GPT Group
chief executive
Michael Cameron
, whose approach to new development has been particularly conservative, has also signalled the possibility.

“At our recent update to the market we flagged our ambition to grow our industrial portfolio. At Sydney Olympic Park we have continued to field strong inquiries and all of our assets at that location are 100 per cent leased, so we would build speculative developments in that location," Mr Cameron said.

Colliers International’s managing director for industrial, Malcom Tyson, said there was a shortfall of 197,000 square metres of prime grade industrial space.

Colliers estimates that the demand for industrial floor space was strongest in Brisbane, at 254,000 sq m or 29 per cent of the total, followed by Melbourne with 217,400 sq m and Sydney with 192,500 sq m.

In Brisbane, there are 16 major companies with large space needs, including four mining logistics ­companies, three steel manufacturing groups and five heavy machinery providers.

While demand is strongest in Brisbane, only Australand is building speculative developments there.

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“The difficulty in Brisbane is that if you are going to spec something it has to be part of a major estate, but it’s very difficult to get that area zoned and ready straight away," Mr Tyson said. “[The major developers] are looking but it’s difficult to find. The land is a bit expensive there."

One or two major private operators have been holding out waiting for what many in the industry expect will be a correction in land pricing.

Some larger industrial land parcels have been sold off in the past month, including Investa’s $20 million sale to Swiss construction materials group Holcim.

The company is planning a $75 million manufacturing facility at Swanbank, Queensland.

Colliers forecasts that the greatest pressure on rents over the next year will be in Brisbane, where there is a supply shortfall of 189,000 sq m, ­followed by Melbourne with a shortfall of 92,000 sq m. Adelaide has a shortfall of 61,000 sq m and Perth 55,000 sq m.